Shares of Bed Bath & Beyond (BBBY), an omnichannel retailer offering home furnishings products, plunged nearly 19% Thursday morning after the company released disappointing fiscal 2019 third-quarter results. Here are the financial details, a guidance surprise, and a silver lining for investors.
Let's start with the top- and bottom-line misses. Revenue declined 9% to $2.76 billion, compared to the prior year, falling short of analysts' estimates calling for $2.85 billion. Adjusted earnings per share checked in with a loss of $0.38, which was a stunning miss compared to analysts' estimates for a profit of $0.02 per share. The top-line decline was driven by a 8.3% decline in comparable sales during the fiscal third quarter, but that was partially due to an unfortunate calendar impact. More specifically, the fiscal third quarter ended Nov. 30, 2019 and therefore didn't fully absorb the critical five-day shopping period from Thanksgiving to Cyber Monday. When adjusted to include that stretch in both periods, comparable sales for the fiscal 2019 third quarter declined a more modest 3.6%.
"Our performance in the third quarter was unsatisfactory and underscores the imperative for change and strengthens our sense of priorities and purpose. We must respond to the challenges we face as a business, including pressured sales and profitability, and reconstruct a modern, durable model for long-term profitable growth," stated Mark J. Tritton, Bed Bath & Beyond's president and CEO, in a press release.
There are a couple more developments for investors to consider as Bed Bath & Beyond's stock plunges. Management decided to pull its full-year outlook and guidance because it expects strong pressures to remain during the company's fourth quarter, which is likely why many investors are hitting the panic button Thursday. Tritton also noted in the conference call that "achieving our objective will not be linear." That means investors can expect large pops and drops when quarterly results are released in the near term, due to wildly swinging financial results. The silver lining for investors is that despite those pops and drops, Tritton has valuable experience from his former position at Target and, as a newly appointed CEO of Bed Bath & Beyond, also has the support and understanding to make critical long-term decisions to turn the company's business around. On a day when the stock is down 20% and the retail landscape can be challenging to invest in, that's a bright side for long-term investors.